Unsanitized: 1937 Revisited

America prematurely pulled back on federal relief then. We’re planning to do so again. This is The COVID-19 Daily Report for July 20, 2020.

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First Response

Last year on this day we were marveling at the 50th anniversary of the moon landing, celebrating American ingenuity that can meet any challenge. Today we’re hoping that only 800 people die from this disease that we’ve largely given up on containing. We also begin a critical week for the future of the U.S. economy.

A boost to state jobless aid of $600 a week ends this week for most recipients. (The Journal manages to get two things wrong in its lede; the practical end to the benefit is July 25 or 26 depending on how a state calculates its work week, and it’s more like 32 million people receiving or set to receive benefits, not 25 million.) One-time checks were sent out long ago. The lack of state and local fiscal aid has already set in motion layoffs and triggered premature reopenings (as is clearly seen in, for example, California breaking its own guidelines to reopen). Small business failures have accelerated and states are headed back into lockdown, either formally or functionally. If you only look through June you see an economy bouncing back, but economic indicators are all looking bad this month.

With this backdrop, Congress is set to begin negotiations on the next bill. This is unfolding exactly the way the CARES Act unfolded; Republican leaders are huddling in the White House, preparing to write a bill without outside input, which they will then present to Democrats as if the House-passed Heroes Act never existed. Parts of that wish list like hazard pay for essential workers seem all but dead. Instead, Mitch McConnell is dictating terms.

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Here’s what those terms look like: it starts with a broad release from liability for corporations whose workers and customers get sick. That’s priority number one; not stopping the virus, but stopping lawsuits about the virus. The “temporary” liability would last four years for businesses who make “reasonable” efforts to follow public health guidelines (of which there aren’t any at the federal level, so that’s not much of a hurdle), and adds damage caps just in case a couple cases sneak through. The measure would include hospitals and schools, so parents should know that the party pressuring schools to reopen also wants to give them immunity from sickening your child (and potentially you). Keep in mind that there are next to no lawsuits right now.

There will be some form of funding for schools, probably attached to reopening and probably including private schools. More money will be thrown at testing and vaccine R&D (unless the White House sabotages it), which is good, but if the public is paying for creating a vaccine, there should be no need to pay again to receive it (don’t tell that to Wall Street, which is bidding up every pharma company that updates its vaccine development). McConnell wants to re-appropriate the $130 billion left in the PPP (which, if trends are any guide, will get larger the next couple weeks) for what seems to be a second grant to businesses with deep revenue losses. Banks are also pushing to just forgive the initial PPP loans, because they don’t want to do a stitch of work in verification that the money was spent within the program guidelines. I don’t see what they’d do anyway, verification was on the business borrower, but uploading that to the Small Business Administration is apparently too big a burden for $18 billion in fees.

Missing from this is any state and local fiscal aid. Republican leaders say they just want to free up whatever’s left from the paltry $150 billion given out in the CARES Act to fill budget holes. That won’t be close to enough. Unemployment assistance is likely to be lowered, possibly tempered by a one-time check or a “signing bonus” to return to work. On the other hand, Republicans will likely buckle to Trump’s demand for a payroll tax cut, thereby helping out workers who have a job more than the 30 million-plus who don’t in the name of “targeted stimulus.”

Chuck Schumer has implicitly threatened that a bill written inside McConnell’s office won’t get any Democratic support and therefore won’t break the 60-vote threshold. But he used the CARES Act—the bill that got us in this position in the first place—as a model for how to proceed.

The whole thing has got me thinking about 1937. The Social Security Act started collecting payroll taxes that year, even though payouts did not begin until 1940. Franklin Roosevelt compounded this quirk in the calendar by deciding to eliminate the budget deficit, including cuts to the Public Works Administration and the Works Progress Administration, and even … cutting unemployment benefits. The result was a recession inside the Great Depression.

At least Roosevelt had four years of gains behind him before foolishly venturing into austerity and finding that the economy was too sick to support it. We’ve had two decent jobs reports, and a resumption of cases that blocks any further recovery. The economy can’t even support a normal cycle of spending right now, let alone a sharp reduction in income for 30 million-plus unemployed people. We have a week for everyone to come to their senses.

Monopolized

Have I mentioned that I have a book coming out tomorrow? Monopolized: Life in the Age of Corporate Power releases on July 21, and you can learn more about it and pick up your copy here.

I’ll have more on that tomorrow, but I was on This is the Zero Hour with R.J. Eskow giving my first wide-ranging interview on the book. Listen here. I’ll let you know about more appearances as they roll out; several are scheduled for this week.

I should also mention that I’m on a panel at Netroots Nation about regulation and the next president. It’s happening Friday, August 14 at 4pm ET. More information about Netroots Nation is here.

Days Without a Bailout Oversight Chair

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Today I Learned

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